Shopping for a mortgage
Buying a home is something that just about everyone hopes
to accomplish in their life time.
But
buying
a home and taking out a mortgage are two things that
go hand in hand; you pretty much can’t have one
without having the other (that is of course, unless you
have the cash on hand already, which most people don’t).
Shopping
for a mortgage is one of the most important parts of the home buying process, since this is how you will
finance the purchase.
The article, “How to shop for a mortgage,”
posted on mortgage-x.com lists some step-by-step examples
of how to shop for a mortgage.
There are many factors you must take into consideration
when shopping for a mortgage; including interest rates,
price of home and a lot of other things.
“Once you have decided to go with a
certain
loan program, and find out current interest rates,
you can begin shopping interest rates among lenders. To
find the best possible deal, you should do some research
and
compare
the mortgages offered by several lenders before you
commit to borrow. It isn't always easy to compare loans
because your mortgage rate is only one part of your mortgage
loan. You should also compare points and other fees. There
are a number of different fees involved in getting a mortgage
that can add thousands of dollars to the cost of your
loan, and some lenders have different names for them.
One lender might offer to waive one fee and then add another
one. Comparing what different mortgage brokers and lenders
are charging you to get an interest rate is often the
most difficult part of mortgage shopping.”
You definitely should shop around for a mortgage before
deciding on one, to see what you can afford and who has
the best prices.
“Selecting a mortgage may be the most important
financial decision you will make. Most likely, you will
be paying off this debt for years, and after all, a small
difference in the mortgage rate can make a big difference
in monthly payments. We hope the following will help you
shop for a mortgage most effectively.”
This excerpt shows why it is so important to shop around
for a mortgage. Even the smallest difference in a rate
can save you thousands of dollars in the future.
The first thing the author recommends doing in shopping
for a mortgage is to get your credit score. There are
three credit agencies in which you can solicit to obtain
a copy of your credit score, and you should get a copy
of it from all three of them.
“An inaccuracy you aren't aware of could cost you
thousands of dollars in extra interest or even cause a
denial of credit; it is estimated that 50% of all credit
reports contain errors significant enough for an individual
to be denied a loan!”
The next thing you should do is to take a look at the
interest rate market. Once you get a good feel for the
market it will help you see what type of loan you want.
Next, you should decide which type of mortgage you want
to go with. There are many different mortgage products
available on the market, and it is important to decide
which one is right for you.
The two most popular types of mortgages are fixed-rate
mortgages and adjustable-rate mortgages.
“Before deciding which mortgage to get, look at
the whole product. Pay close attention to the terms of
a loan including the type of the mortgage, the presence
of prepayment penalties, low or high down payment,
mortgage
insurance requirements, payment schedule, lock-in
period and many other features. Pick the loan with the
rate and other terms that suit your situation best. For
example, prepayment penalty clause can be very important
if you are planning to sell your house or refinance in
the next 3 - 5 years, or if you expect to prepay your
loan.”